Buying off-plan in Spain: how the payment schedule and bank guarantee work

Buying a property that does not yet exist. For many buyers, that can feel a little unsettling.

Yet, buying off-plan on the Costa del Sol is the rule rather than the exception. A large proportion of new-build properties are sold before the first stone is even laid.

The process is well-regulated, provided you know how it works and what to look out for.

What a payment schedule looks like

When buying off-plan, you do not pay in one go. You pay in stages, linked to the moment of purchase and the progress of the project. A common schedule:

• Reservation: a fixed amount, often between €6,000 and €15,000, to take the property off the market
• Purchase contract: within a few weeks, you sign the contract and pay an initial percentage, often 20 to 30% minus the reservation fee
• During construction: sometimes there are interim payments, sometimes not
• Completion: you pay the remainder, often 60 to 70%, at the notary, where you also receive the keys

Every project has its own schedule. Always check it in the purchase contract, not just in the brochure.

The bank guarantee: your most important protection

This is the crucial part.

Spanish law requires developers to guarantee the deposits you make before completion. This is done via a bank guarantee or an insurance policy for each buyer. Furthermore, your payments must be deposited into a special project account.

If the project is not completed, or not completed on time, you are entitled to a refund of your deposits, including statutory interest.

That is why we have a strict rule: no deposit without an individual guarantee in your name. Your lawyer will verify this before you make any payment.

What to look for in a developer

A guarantee protects your money, but naturally, you want the project to be completed as planned. Therefore, look at:

• Track record. Which projects has the developer completed before, and were they on time?
• Building permit. Has the permit already been granted, or is it still being applied for?
• Land status. Is the land owned by the developer and free of any charges?
• Financing. Is the construction financed, or is it dependent on sales?
• Specifications. Does the contract state exactly what you are getting: materials, kitchen, air conditioning, parking space?

Upon completion: don't sign blindly

Before you pay the balance at the notary, the property will be handed over. Have the property inspected at that point and record any defects in writing.

Also check whether the property has been declared habitable. In Andalusia, this is done with a first occupancy licence or, increasingly, with a declaration from the developer that replaces it. Without this document, you cannot connect utilities or rent out the property.

Buying off-plan with a mortgage

Are you financing part of it? A Spanish mortgage is only provided upon completion, based on a valuation at that time. You will therefore need to pay the deposits during construction from your own funds. Take this into account in your planning.

You can find more about the terms you will encounter during this process in our glossary.

Our conclusion

Buying off-plan is not a leap in the dark. It is a clear process with strong legal protection.

The difference lies in the preparation: the right developer, a sound contract, and a guarantee in your name.

Would you like to know how we select and check projects? Take a look at our purchase guidance or schedule a consultation.